Traditional North Palm Beach Real Estate Loses iBuyer Competitors

Of all the changes that technology has brought to how North Palm Beach real estate transactions are conducted, one of the advances that many thought would literally transform almost everything arrived with the introduction of iBuying. The theory behind it was simple enough. Well-funded companies would use computer programs to estimate North Palm Beach residential property values, then pay cash to buy the homes directly from their owners.

For iBuying Industry, a Threatening Future

For some sellers who were attracted by the idea of a quick sale without any of the regular selling steps, it was an appealing prospect. No muss, no fuss (and no work or time spent). In fact, the “i” in “iBuying” stands for “instant”—because iBuyers would use available market data to generate a cash offer within 24 hours of a seller’s inquiry. The convenience factor was meant to compensate for what was usually a significantly lower offer.

For the iBuying firms, the concept presented a neat package: a way to do business on an industrial scale with predictable profit margins and minimal human interactions. (Human interactions are unpredictable, expensive, and decidedly not what makes an accountant-driven business model attractive).

Last week, national real estate publication TheRealDeal checked into the health of the iBuying industry. They weren’t enthusiastic about what they found. “iBuying on the brink” reported on industry analyst Mike DelPrete’s thoughts—which boiled down to his expectation that the iBuyers “are facing extinction, one by one.” The first major casualty had been Zillow, which quietly bowed out after racking up $900 million in losses—which had dented the mother company’s stock price. Next came Redfin, which announced in November that it could “no longer remain competitive” due to interest rate woes. Most recently was Offerpad, newly threatened by the New York Stock Exchange with delisting after its stock price fell below the NYSE’s $1 threshold. Opendoor is still standing, but with a loss of $928 million in the last quarter, an executive suite shakeup appears inevitable.

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What does this portend for North Palm Beach real estate? It looks as if the whole idea of turning a house into just another commodity has real-world risks that can turn horrendously expensive—especially when you have tens of thousands of properties that aren’t selling the way the computer algorithm predicted. Either that, or buying and selling the cornerstone of everybody’s American Dream just naturally requires a lot of human interactions. To make the most of your next North Palm Beach real estate interaction, I hope you’ll give us a call at (561) 316-6800!